Posts Tagged 'Housing'

While price growth is flat, now is the time to reform housing policy, according to Australian Greens housing spokesman Scott Ludlam.

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Created on November 3, 2009 using FlipShare.

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When most investors think of affordable housing, they immediately think of the vehicle to address this niche as apartments. In fact, the majority of affordable housing stock is apartments. However, following the lemmings has never been a great investment tactic. Mobile home parks, and not apartments, are the correct option for high investment returns in this growing market segment.

Why affordable housing?

In our new, depressed economy, the only form of housing demand that is consistently growing is housing for poorer people – called “affordable housing”. These are the people who often work minimum wage jobs and have few economic resources. A quick look at the “help wanted” section of your newspaper will demonstrate that most of the available job openings are in this “affordable” demographic. Section 8, the government program to house people who cannot afford housing, is also a part of this sector.

Why mobile home parks are superior in this niche

One of the great benefits of mobile home parks over apartments is that the owner is only responsible for the land under the mobile home, whereas apartment owners have to contend with the buildings. And being in charge of buildings with affordable housing customers is the great downfall of investing in this arena.

Affordable housing customers are notoriously rough on their dwellings. Their chaotic lifestyles, which often include very large numbers of children and a rough & tumble attitude, lead to large numbers of repair and maintenance problems. Virtually everything in the unit becomes broken over the span of their tenancy – the faucets, knobs, drawers, cabinets, windows, screens, doors, all need to be replaced. And that does not count the endless repair calls for stopped up toilets and sinks.

Apartment owners are deluged with these issues. When the phone rings at a mobile home park, the repair approach is much simpler. You just say “I’m sorry, but we don’t own your home”. In fact, the mobile home park owner is only responsible for the roads, landscaping, and delivery of water, sewer, gas and electric to the customer’s lot.

And don’t forget about liability

One of the additional problems with affordable housing tenants is their endless appetite for litigation. They see the legal system as a means to make quick money, whether or not their claim is legitimate. These legal avenues can include black mold, formaldehyde, and sub-standard housing. They can also turn about any repair claim into a slip and fall or endangerment claim such as a faulty smoke detector.

With a mobile home park, these claims can’t happen – you don’t own the unit.

Why mobile home parks have higher returns

Mobile home parks have higher investment returns than apartments for two main reasons.

The first is that they are priced to allow a significantly higher return. Due to the lower investor demand for these properties, they are priced to often yield a 10% cap rate on the front end, as compared with a 7% in apartments. This is almost a 50% greater return.

The other reason mobile home park returns are higher is that the pricing information is often imperfect. The old moms and pops who own most mobile home parks are very poor at managing their properties. You can often increase the revenue by a huge amount – often 100% — due to the lack of increasing rents over years to match the market. Additionally, most moms and pops have extremely poor cost-control systems. You will find mobile home parks that are carrying management overhead, in the form of salaries, that can be $50,000 on a park that should be $15,000. These kind of problems can be corrected virtually overnight and the returns are enormous.

And don’t forget about seller financing

Most mobile home park sellers are happy to carry the paper. This virtually never happens in apartment complexes. Since most moms and pops own the property outright, they can afford to carry the financing, often with as little as 10% to 20% down – although in some cases they will even do 100% financing, if the property needs significant turn-around work.

And this seller financing, unlike apartment complexes, is often non-recourse.

In a terrible environment for real estate financing, like we’re in, this additional plus to mobile home parks is incredibly important.

Conclusion

If you want to invest in affordable housing – and that’s just about the only slice of commercial real estate that is showing any future right now – you should aim for mobile home parks. They are less management intensive, have greater upside, and are priced to allow for much greater returns than apartments.

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Observations on the Economy, Real Estate, Finance, and Investing: Stats Wont Save Us * Tangled in the Reins of Negative Equity * Speaking Real Estate Today

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Rental property for rent scott, thompson management 435-753-8180. www.Rental-List.com Search All MLS real estate listings of homes for sale in Northern Utah, Wasatch Front, Logan and Cache Valley with photo’s, addresses, and neighborhood information. Find UT Houses and Condos, http Homebased Realtors

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The HIA is of the opinion that housing affordability is very low. The lowest it has reached in 24 years. They do not see much hope of it improving even if there is a fall in mortgage rates, which is very unlikely. The home loan repayment hovers around $2830 a month.

The HIA-CBA First Home Buyer Affordability Index has gone up by 0.3 per cent during the quarter of the June 2008. In spite of this the figure is still 6% lower than the previous year. The independent rise in borrowing rates by the banks has done nothing to improve the situation.

The slight increase in the affordability rate just means that now the consumer can invest in a small first home. Ben Phillips who is a member of the association is of the opinion that the average income of the Australian People six years ago was much more than what was required, nearly double.

Today the scenario is such that almost thirty percent of the family income goes for mortgage repayment which amounts to almost $ 2830 a month averaged. The financial institutions and small banks raised the interest’s rates independent of the Reserve Bank during the June quarter of 2008.This increased the average home loan repayment by almost one percent.

The median first home price increased from Dollar four million twenty four thousand six hundred $ in the March quarter to $425000 in the June quarter. Mr. Harley Dale Chief Economist of HIA says that even if the mortgage rate is decreased marginally in the second quarter of the year it will not have big impact on the affordability rate. Though, it can ease the strain a little bit.

The interest rate are high plus the amount of taxes by the local, state and federal government and other charges on a new house puts extreme pressure on the individual buying a house for the first time. Another threat that the HIA fears is that of shortage of skills. It will also pose to be a big problem in the affordability of housing.

According to the report it was not easy to afford a house in Melbourne, regional Queensland Adelaide, Hobart, Sydney and regional South Australia during the June Quarter. It will be only by the year 2009 -2010 financial year that one can expect to see any improvement in the housing affordability.

Housing can become affordable if interest rates come down and the supply too becomes better. In order to increase supply of houses, the construction of houses should become easier. All this will add to make the housing affordability within reach of first time house buyers.

It is not easy constructing a house. The land cost, Stamp duties, government fees and the different taxes laid by the state and federal government is high all put together raises the cost of constructing the house. The government at all levels must cooperate to reduce charges. They must also lessen bureaucracy to speed up approvals.

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Copyright (c) 2010 Nadine Davis

There are fewer houses available than ever in Australia right now. What happened? How did we get here? To understand why there is a housing shortage in Australia, you have to look at several different factors. You can learn more of the basics about this phenomenon below

More People Means Fewer Houses:

Migration is one of the leading causes of the current housing shortage in Australia. Between 2007 and 2008, for instance, the population of Australia grew by approximately 400,000 people. It is estimated that 60% of those new arrivals came from overseas. As this country experiences higher migration rates from overseas, less and less houses are readily available – unless new ones are built, of course, which doesn’t seem likely to happen very soon.

Less Lending Means Less Building:

Builders are being stymied by the reluctance of lenders from around the country to approve financing for new construction.  If it were not so hard to get approval on a new loan, there would be a boom occurring in the housing construction industry as we speak. New building would be good news not only for people who are looking for homes, but for property investors as well. Generally speaking, buyers agents Brisbane are eager for building to increase. Although it will drive prices down, it will also increase demand and more people would be in the market for new homes.

Fewer People Living In Each Home:

In years past, a single dwelling would be the home of several people. In fact, multi-generational housing situations used to be quite common. These days, though, more and more people are living on their own. Divorces have increased, and this means that less and less families live together in the same dwelling. All of this means that more homes are being occupied by fewer people – and that helps contribute to the overall shortage. Will things swing back the other way, with more people living in one home? Only time will tell.

The Bottom Line:

The bottom line concerning the current housing shortage in Australia is that it has driven prices – and demand – up. This is music to property investors’ ears, since investing in property now almost assuredly means significant profits down the line. Still, caution is always necessary and having the right help is imperative. To that end, a buyers agent is definitely one of the very best ways to go. Whether you’re looking for a home to live in – or for one to invest some money in – you should consult with an experienced buyers agent for advice.

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Acording to HIA, although the mortgage rate is decreased, the housing affordability is still low. Because interest rate are high plus the amount of taxes by the local,state and federal government and other charges on a new house puts extreme pressure on the individual buying a house for the first time.

The HIA is of the opinion that housing affordability is very low. The lowest it has reached in 24 years. They do not see much hope of it improving even if there is a fall in mortgage rates, which is very unlikely. The home loan repayment hovers around $2830 a month.

The HIA-CBA First Home Buyer Affordability Index has gone up by 0.3 per cent during the quarter of the June 2008. In spite of this the figure is still 6% lower than the previous year. The independent rise in borrowing rates by the banks has done nothing to improve the situation.

The slight increase in the affordability rate just means that now the consumer can invest in a small first home. Ben Phillips who is a member of the association is of the opinion that the average income of the Australian People six years ago was much more than what was required, nearly double.

Today the scenario is such that almost thirty percent of the family income goes for mortgage repayment which amounts to almost $ 2830 a month averaged. The financial institutions and small banks raised the interest’s rates independent of the Reserve Bank during the June quarter of 2008.This increased the average home loan repayment by almost one percent.

The median first home price increased from Dollar four million twenty four thousand six hundred $ in the March quarter to $425000 in the June quarter. Mr. Harley Dale Chief Economist of HIA says that even if the mortgage rate is decreased marginally in the second quarter of the year it will not have big impact on the affordability rate. Though, it can ease the strain a little bit.

The interest rate are high plus the amount of taxes by the local, state and federal government and other charges on a new house puts extreme pressure on the individual buying a house for the first time. Another threat that the HIA fears is that of shortage of skills. It will also pose to be a big problem in the affordability of housing.

According to the report it was not easy to afford a house in Melbourne, regional Queensland Adelaide, Hobart, Sydney and regional South Australia during the June Quarter. It will be only by the year 2009 -2010 financial year that one can expect to see any improvement in the housing affordability.

Housing can become affordable if interest rates come down and the supply too becomes better. In order to increase supply of houses, the construction of houses should become easier. All this will add to make the housing affordability within reach of first time house buyers.

It is not easy constructing a house. The land cost, Stamp duties, government fees and the different taxes laid by the state and federal government is high all put together raises the cost of constructing the house. The government at all levels must cooperate to reduce charges. They must also lessen bureaucracy to speed up approvals.

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More than half of the nation’s housing markets are appreciating or have at least stabilized, according to the latest national assessment conducted by Housing Predictor, an independent information driven web site, which forecasts housing markets in more than 250 markets in all 50 U.S. states.

Some 56% of the nation’s markets are appreciating or have stabilized. Improving markets are scattered from the east coast to the south and include the Pacific north-west. Most are experiencing higher sales volume than in 2006 due to lower prices. At least 18 states have housing markets with appreciation, including Washington and Oregon.

Texas, which had lagged behind much of the nation in appreciation during the national boom has seen its markets take a direct turn around. Houston, Dallas, Austin and other markets in Texas are even reporting buyers paying full price for some properties. New Mexico markets are experiencing similar results.

The sub-prime loan problem has led to the nation’s second all-time high level of foreclosures behind the U.S. Savings and Loan Fraud Crisis in the late 1980′s. But eager investors are beginning to make a dent in the foreclosure market buying many properties for lower prices. Housing Predictor expects foreclosures to continue to increase throughout the remainder of the year, and level off toward the end of 2007 as more investors purchase properties.

The sub-prime problem has quietly already spread into the conventional lending market, which lowered mortgage borrowers qualifying standards with a variety of aggressive exotic loan programs. However, economic forecasts indicate the damage in the conventional lending markets should be limited.

Raw undeveloped land, however, and newly developed subdivision lots in many areas of the country are expected to be the next casualty of the growing sub-prime problem. Foreclosures of subdivision lots are forecast to increase through the year, but economists are unsure of what the impact will be on the national real estate market.

However, with the increasing inflationary pressures on the Federal Reserve Board to cut interest rates in order to stave-off an economic crisis, Housing Predictor now expects the Fed to cut interest rates before the end of 2007 to help the U.S. housing market avert a worsening national real estate slow down. After 17 rate increases the Fed has left the prime lending rate unchanged for more than a half year.

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The interest rate increase has in turn caused a rapid fall in the housing sector. There is a home loan fall of around 7.9% which is a steep fall in past eight year’s time. With the increase in interest rates and the cost of living boost has become a burden for the common man. The Melbourne Institute index is at its lowest level, forcing consumers to reduce borrowing.

How does Rates woes prompt housing slump. It is also seen that the economy is slowing drastically; looking at the figures proves this fact. The Reserve Bank of Australia feels that the fall in the construction rates have been a boon as they will not be any need for them to increase rates.

Where else does Rates woes prompt housing slump. It is seen following the patterns of United States and Britain, Australia has also gone into housing recession leading to fall of housing sector. The reasons for this fall are increase in borrowing costs and slow economic growth which is leading to decrease in housing price fall for the past five years.

What does International Monetary Fund say on Rates woes prompt housing slump?

The International Monetary Fund has estimated the property market would slide by 30% by the year 2010. Since the Great Depression most of the Australian cities have experienced a slash in house price.

According to International Monetary Funds expert who feels Australian houses are overvalued by 25% in the year 2007 when it is compared with the household income. It was thought only Ireland, Britain and Netherlands were supposed to have a higher value for their houses, but the scenario has changed today.

Residex’s view on Rates woes prompt housing slump

It is felt that the data is highly irregular when compared with the data since 1865. Housing cost has fallen in cities like Melbourne, Sydney, Perth, Brisbane, Adelaide, Darwin, Hobart and Canberra by 0.6% to 2.2% according to Residex.

Rates woes prompt housing slump is a reality, the 100 year slide is seen in real estate and every aspect of housing industry has gone into negative. The debt in housing has grown twice since 1990 to 160% of the income, which is a lot more than Britain and the United States, says AMP Capital Investors. The median house price has increased by 140% during the period.

It is also felt that compared to Americans’ spending on property the Australian houses are very expensive. An Australian spends his six years of earning on property, whereas an American expends only half of that.

The growth rate is the same since 1991, whereas the Reserve Bank of Australia expected growth to move from 3.9% to 2.25%. The number of unsold homes is also going up and auction rates are falling. It is also seen that the period it takes to trade a properties has also gone up by 50%.

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